Jumbo launch delayed

Development of the A3xx would be expensive

The biggest commercial airline project in Europe received a setback after the key partners in the Airbus consortium delayed a crucial meeting.

Airbus, which already makes more smaller jets than Boeing, had been planning to announce the launch of its A3XX 'super jumbo' at the Berlin air show this week.

But the Airbus board meeting was delayed and then postponed after disagreements over who was to build the new plane.

Airbus said that the company would make a decision on the launch soon, and also announce its plans to convert itself into a fully integrated company.

But it said "on both these decisions, there are outstanding issues".

German Chancellor Gerhard Schroeder cancelled a planned visit to the air show, but his spokesman denied that there was any link to the Airbus delay.

The new super jumbo aircraft would carry between 550-650 passengers at ranges of up to 8,700 miles (14,000 km).

It will create thousands of jobs across Europe, with the UK's BAE Systems one of the main contractors.

Who will build the plane?

The other members of the Airbus consortium, France's Aerospatiale, Germany's Dasa, and Spain's Casa would also have a key role in construction.

With so many jobs involved, the argument has already started on where the plane should be built.

Both France and Germany are vying for the final assembly site. Most Airbus planes are assembled in Aerospatiale's Toulouse plant, but Dasa wants the super jumbo to be built in Hamburg.

Dasa chief Rainer Hertrich admitted that a decision on how to divide up the work was crucial to the launch decision.

BAE is worried that it will be frozen out of the decision-making process entirely once Airbus becomes a private company, rather than a consortium.

That is because the other members of the consortium are merging to create the European Aerospace, Defence and Space (EADS) Company, which will have an 80% controlling stake in Airbus.

BAE is believed to be holding up the super jumbo announcement until it receives guarantees about future Airbus work, and a "vital interests" clause giving it a veto over major Airbus decisions, especially any decisions to shift employment elsewhere.

As a minority shareholder, it may also want hard cash for the Airbus assets it will be transferring into the new firm.

"BAE does not want to be the junior partner in Airbus," one analyst said.

Meanwhile, uncertainty still surrounds the launch of EADS itself, which is supposed to take place in July. The launch is complicated by the role of the French government, which still has a minority stake in Aerospatiale.

Will it ever fly?

Any decision to offer the plane for sale is likely to be merely the first stage along the road to the aircraft beginning commercial flights in 2005, at the earliest.

The "authorisation to offer" will allow Airbus to sign contracts with airlines interested in buying the huge plane.

Airbus says it is confident that there is enough interest the launch the A3XX, with five airlines (Air France, Emirates Air, Singapore Airlines, Virgin, and leasing firm ILFC) already committed to firm orders and several others discussing terms.

The planes are likely to cost between $230m and $280m each, with a substantial discount for launch customers.

But the move is a huge gamble by Airbus, which will need to spend about $12bn to develop the new airliner.

Up to one third of that cost could come from European governments, with the UK already pledging £500m ($750m) towards the task.

Boeing, which has said it does not believe there is enough demand for the plane, could launch a spoiling operation by developing a stretched version of the 747.

Airbus says there will be a demand for 1,500 big jets, but Boeing estimates the world-wide demand at closer to 360.